Britain now the only country in G7 where inequality has increased this century

The amount of UK wealth controlled by the richest 10% in the population increased to 54.1% this year, a rise from 51.5% in 2000, according to the annual Credit Suisse global wealth report.   Most of this rise has actually occurred since the financial crash since in 2007 their share of wealth was 52%.   They have become wealthier because financial assets such as shares have risen strongly in value as investors sought higher returns with interest rates at all-time lows.   Another factor was the pre-eminence of London with its soaring property prices and its position as the UK’s financial powerhouse unmatched by other European countries, including Germany.  As a consequence Britain now has 44 $ billionaires, a 5-fold increase in just 14 years from 2000 when there were only 8.   Similarly the number of people in Britain whose net worth (a market euphemism for often ill-gotten gains) is at least £30 million almost quadrupled to 4,660.   If the value of equity in houses is included, Britain now has 2 million $ millionaires.

This is the same country that has, according to End Child Poverty research, a quarter of all its children living in poverty if housing costs are taken into account (as of course they should be).   This figure actually rises above 40% in some of the most expensive parts of London, illustrating how extreme wealth and deep poverty are increasingly found side by side.   In the most socially deprived areas of Britain fully 50% of youngsters now live in families struggling below the poverty line set at 60% of the average (median) wage.   Altogether there are no less than 2.3 million children in Britain today living below this minimal subsistence standard.

Inequality on this scale will only be resolved by radical measures far beyond the conventional thinking of reformers today.   It will certainly not be solved by the promise of minimum pay of £8 an hour postponed till 2020 – unless that is upped to £10 an hour.   There are really only three mechanisms which are likely to roll back the mountain of inequality that has built up in the last 30 years.   One is a systematic and remorseless purge of tax avoidance by the richest individuals (via tax havens) and multinational companies (via transfer pricing).   The second is by establishing the ratio between top and bottom incomes and slowly but relentlessly reducing it over time.   On that basis I have sought a debate on the floor of the Commons to advocate this: “that this House calls on the Government to set guideline targets for remuneration which over time reduce the ratio between top and bottom incomes in large organisations to no more than 50:1.   The third is by giving a vote on executive pay, not just to shareholders, but to representatives of the workforce who have a right to it as the co-creators of the company’s wealth.   Or, perhaps, all three.

 

11 thoughts on “Britain now the only country in G7 where inequality has increased this century

  1. The trouble is that the people who make the rules nowadays, tend to make them to their own personal advantage, and to the advantage of Party donors.
    So the best of luck with your Commons debate!

    They also believe that money from the top will filter down to those at the bottom, but this does not seem to be the case. The rich are getting richer and the poor are getting poorer. However, what these people in their ivory towers don’t seem to realise, is that they are destroying the entire country and the fabric of society. If this carries on, this won’t be a good place for anyone to live in; not even them!

    Even now, more people are being driven to crime, out of sheer desperation, and this is getting worse.

    I read a while back that the most egalitarian societies are also the most successful, and that when it came to inequality, the UK was on a par with Nigeria! This is really shameful.

    I hope this article might be of some help to you:

    http://www.timeshighereducation.co.uk/books/the-spirit-level-why-more-equal-societies-almost-always-do-better/406567.article

    Quotes:

    While it is often assumed that social problems bear little relationship to average incomes, the evidence suggests that income differentials within populations matter a great deal….

    ……reducing inequality may be the best way of improving our social environment and quality of life.

    The costs of income inequality are clear. The most equal countries are Japan, Sweden, Norway and Finland, and the most unequal are the US, Portugal, the UK and New Zealand.

    In those countries and states where income differentials are larger, social relations deteriorate and levels of trust are lower.

    In the most unequal countries and states, there is more gender inequality, too, and these places are less generous. A higher proportion of people suffer from mental illness, and more use drugs.

    Less egalitarian countries have six times as much obesity. Educational attainment is poorer, with higher drop out rates, shorter periods of paid maternity leave and less early childhood education. Teenage birth rates are higher, and it is young men from disadvantaged neighbourhoods who are most likely to be the victims and perpetrators of violence.

  2. You say all that, (of course you do,) and yes, it is all perfectly despicable isn’t it, (pass the port,) but as you point out in your book, what makes it even more despicable still is that Balls and Milliband’s, shabby and grasping “New Tories,” (i.e. the remaining rump of Blair’s Nu; Labour now completely purged of all left wing principles, affiliations and socialist tenancies and now also completely at the beck and call of the very same money and influence that you so rightly and so eloquently condemn above,) is still pretending to be, (in some sense completely obscure to everyone else,) somehow the same political party that once cured this country of poverty, ignorance and sickness.

    You said yesterday, that what this country desperately needs is, “hope,” which is true enough, but you needed to go much further, what is needed and what is so lacking from the debased, sordid and paltry remnants of British socialism, (now being operated as little more than a lucrative political racket and fighting more about the control of patronage and driven by political jobbery than by principle,) is real leadership; the leadership to heal the growing divisions in our society, to reinforce the basic concepts of equality and egalitarianism, to protect and to succor the weak, the destitute and the vulnerable and to disperse and curb the predatory, (better us than them eh,) activities of our self styled and self appointed, “elite,” whose prosperity and security are and increasingly so, at the expense of our country as a whole.

    As people get more desperate, history suggests that they’re not going to rise in a mighty proletarian tidal wave and wash away their oppressors. They’re gonna turn on each other.

    Alan Moore

  3. But since we’re on the topic of the criminal and complicit, “rich,” I particularly enjoyed this comment from this morning’s independent:

    “The fact is there is NO Labour party, just a set of lying thieves, who gained control of the party via Tony Blair, THE worst “Labour” P.M. in it’s history. Labour does not, would not, invade Iraq on a pack of blatant lies, and leave the middle East a festering mass of future terrorists, How much did this lie about WMD’s cost ? How many dead Iraqi’s ? How much has Afghanistan cost, and what did we achieve in both these countries. ? WE made things infinitely worse. Meanwhile the ex “Labour” P.M.is a squillionaire ? HOW ?”

  4. sorry but all true has above labour isn’t labour anymore not until the unions show them how to put new mps made for the working class not the blue type it seems you only interest is your owns jef3

  5. oh I missed that part jp about how tb is a rich one were is atos profits going has this was made on his watch funny isn’t it the frog only gets 2.2milion weres the rest going devious blair perhaps jeff3

  6. I agree with Michael Meacher sentiment regarding the inequalities of our society, but I also agree with the Conservative argument that the minimum wage is not the answer. You could increase the minimum wage to £20, £30 even £50 per hour without any long term affect on inequality. The richest in society would just increase their bonuses and salaries to compensate.

    A Conservative would argue that having a minimum wage actually destroys Jobs, and with so many of their arguments, they can be justified. If a small business has to suddenly increase the wages of much of their workforce, then it could seriously affect their cash flow, so they either go bankrupt or they sack some of their workforce. A very powerful argument? But Conservative don’t care about the living standards of the workforce, they care about the bottom lines on the balance sheets of the Corporations that fund their re-election campaign.

    So here we haver a typical false argument – a Punch and Judy show which gives the illusion that Labour want to help the workforce by putting up wages and the Conservatives who argue that if that happens, it will make people unemployed. It’s a perfect two party political argument as both sides can rightly claim to be protecting the hard pressed working person. So a road sweeper has a choice – he can vote Labour because he wants more money or he can vote Conservative because he’s worried about losing his Job.

    The problem is that both Partys have been meddling in capitalism by setting rules and regulations for Business to follow, demanding income Tax and National Insurance payments which partly goes towards paying interest payments on the National Debt because they’ve delegated the task of creating money to private corporations.

    We have public control where we should have private control (Bank Subsidies and Bailouts) and we have private control where we should have public control (NHS, Railways, Schools).

    Both main partys have been eager to prevent Banks from going bust because if a Bank goes bust, the whole system collapses. This is a distortion of fair market activity, where the Government prevents failing Banks from going bust, and actively allows them to engage in ever more risky behaviour. It’s welfare for the rich. It effectively means that our Government has been privatised.

    When Thatcher came to power in 1979 we had the Nationalised British Leyland and the constant strikes for increased pay demands. The unions were regarded as extreme left wing – almost – communist organisations who were also greedy and wanted their members to extract as much money from the car firm as possible. Same with the Coal Miners who were regarded in much the same light. What was often ignored was that we were all suffering from very high inflation since 1971 and the dropping of the Gold Standard and reduced bank regulation allowing a dramatic increase in credit which really took off in the eighties. Housing was now seen as a speculative investment, before 1971 – it wasn’t. Higher housing costs – caused by Governments and Banker greed for profits, created a need for higher pay demands – it was nothing to do with a low minimum wage.

    Having a small number of excessively wealthy individuals and corporate CEOs allows such people to buy Politicians. My local Politician would be influenced by me if I donated £5 million pounds to the Conservative Party, but because I don’t contribute £5 million to the Tories, my MP listens politely and then gives me the well scripted party line on why I’m wrong about an issue. Lord Ashcroft has more influence over my MP than I do and he doesn’t even live in my constituency, and it’s not because he works tirelessly handing out Tory leaflets at the weekend it’s because he gave them £5 million quid and he expects something in return for his investment. Why do you think that TTIP is all about “Investors”?

    I was told over a year ago that the “Help to Buy” scheme would not create a House Price bubble. I said it would, and it has, not because I am particularly clever but the arguments made by people such as PositiveMoney, Steve Keen and the New Economics Foundation made sense. They have a practical model of the economy that includes Banks, Debt and Money that does provide an indication of how a policy such as “help to buy” will influence the economy.

    In order to get fairness into the Economy we need to prevent Banks from creating our currency as a debt that they benefit from. Current Politicians will not change the system (except a few) because they or their Party’s benefit from campaign contributions. when money is created under public control, Banks will not be able to create or destroy money and will be allowed to go bankrupt. That is how fairness can be brought back by making Bankers care about attracting depositors money – at present they don’t care because they don’t need money to lend money, they create it as a book entry. With Investment Accounts and Deposit Accounts at Banks, Banks would also have to ask permission of their savers as to where they can lend that money. At present, they don’t ask anyone – they don’t have to.

  7. I believe in a safety net and health care for all but I also believe in free market economics. Unfortunately Bankers do not believe in Capitalism or Competition except in other sectors like: Healthcare, Education, Public Transport and War (can’t really call it Defence as our Military goes out of it’s way to attack countries that have not even threatened us – let alone are capable of invading us).

    Bankers are the biggest welfare bums in Society, they represent the exact opposite of Capitalism and Free Market Economics. The Banking System is what is at fault – Bankers just make the most of it by buying Political Favours. It is ironic that our GDP figures now include Prostitution and illegal Drugs, which added 0.7% to our GDP figures. Newspapers stir up hatred of the poor who embezzle a few hundred or even a few thousand pounds from benefit fraud, but Bankers got £375 billion pounds and few people saw the connection between benefit cheats and bankers. David Cameron almost went into a frenzy over £1.7 billion, but forgot about Vince Cable losing a Billion selling off the Royal Mail and completely ignored the elephant in the room called quantitative easing. Gordon Brown almost gave half our Gold away to protect a New York bank and yet he was listened to by gullible Scotsman (the ones that voted NO, the ones that voted YES were the educated minority). Gordon Brown should have be booed out of Scotland and then arrested for treason for giving away the Nation’s wealth to a few of his New York banker chums. Tony Blair seems to have made a speedy getaway but we are still stiffed for the cost of his machine gun carrying security entourage as he is an ex-Prime Minister – a very unpopular one at that. That is a bailout too as if Prime Ministers were not provided with body guards, they might actually carry out policies that were in the public good instead of adopting unpopular policies that only benefit a few campaign contributors and future employers.

    The “poor downtrodden unwashed peasants” – as no doubt many silver spoon type Politicians regard them, do not need a few drippings from the plates of their wealthy masters, they need a level playing field where the financial stabilisers (provided by public wealth) are stripped away from the rich bastards who have seized control of our so called democracy and want to manage the World for their own purposes.

    Why is Deloitte (the accountancy firm that couldn’t recognise the dire state of the RBS balance sheet before 2007) still auditing RBS ? Stupid question – because they have provided “free services” to Politicians.

    The monetary system is the foundation of the Economy, not reforming it is like building a House directly on wet mud.

  8. What happened to the G8? Has the entire Russian Land mass disappeared from planet Earth. I guess Russia is too small to worry about as it only stretches through 11 time zones and makes the United States look about as big as the Isle of Wight.

    Still don’t quite understand this anti-Putin, pro Kiev NAZI sentiment by our MPs.

    I look forward to the day when it’s the G1 Summit – the United States meeting with itself, isolated and alone with the Dollar about as useful as toilet paper. At that point the American people will finally wake up and realise that they’ve had their country stolen once again by European Private Bankers, and immediately tear down the bolted shut doors of the secretive FED to find Tony Blair in there, wearing nothing but his swimming trunks, relaxing in a foam whirl pool with his JP Morgan and Goldman Sachs buddies, smoking Cuban cigars and working on a new American Taxation scam, while being served cocktails by Gordon Brown and George Osborne wearing gimp outfits.

  9. Conrad: of course upping the minimum wage to a living wage would go a very long way towards helping the situation. As long as people have enough to live on plus enough to maintain a reasonable quality of life, they won’t mind quite so much that others have far more. The problem lies not so much in the great differential between the rich and poor, but the fact that the poor, in this once great country of ours, don’t have enough to put food on the table for their children or to heat their homes. Allowing more people to have a disposable income (above subsistence levels)would also help the economy, keeping more shops from closing down and creating more jobs.

  10. Wanda: I think from your first comment, you point out that trickle down economics does not work. You are correct, it does not work.

    You might be interested in this short three minute video which agrees with your view.
    http://www.positivemoney.org/issues/inequality/

    I believe that has been proven with the way Labour and the Conservative Parties handled the financial crisis by concentrating on supporting the large financial institutions through QE. The emphasis has always been on making sure that Banks have had adequate balance sheets (reserves) in the hope that they would lend more that people paid back on previous debt in order to keep the money supply from reducing.

    I agree with you that people who work should have a living wage, and have disposable income. I don’t believe that a minimum wage will achieve that in the long term, what I believe is that we must address the things that someone on a low wage has to cope with. One big expense is Housing – either through mortgage payments or through rent. We are hurting lower paid people who work by allowing subsidies and bailouts to Banks who are encouraged through Government policy (which is also encouraged through City of London lobbyists) to lend more and more into the Housing market, which creates new money which aggregates to the existing money stock, inflating House prices. Increasing the number of Houses will help reduce the price slightly but the biggest influence on House Price Inflation is the continued expansion of credit created specifically for the House purchases. You will be able to see the exponential increase in the creation of Bank Deposits (M4) from the Bank of England’s own data. comparing this with M0 (Notes and coins) you will notice that contrary to public belief, it is not the Government who is money printing, it is the Private Banks who have an incentive to lend as much as people are prepared to borrow. This trend has accelerated over the last four decades as Banks have had fewer restrictions on the maximum quantities of credit they can create. this is why it now takes two wage earners to buy a House. Elizabeth Warren has lectured on this subject in the United States and her research illustrates perfectly point that something has changed over the last four decades to make Housing and other goods and services more expensive.

    “The Coming Collapse of the Middle Class with Elizabeth Warren”
    http://www.youtube.com/watch?v=akVL7QY0S8A

    She does not provide an explanation as to why this has occurred, PositiveMoney provides the answer to that question which is that the cause of this growing income inequality resides at the heart of the money creation mechanism, which we all believed was that only the government can create money, when in fact, private firms – known as Banks – create our money as debt (97% of it). The BoE has estimated that the Banking System relies heavily on subsidies provided by the British Public and in they use those subsidies to draw more wealth from the system. In effect, the Banking System currently operates as a parasite drawing the life blood out of the economy without producing anything of subsequent value and so does not contribute wealth to the economy.

    The solution is to withdraw this privilege from Banks of allowing them to create money as an interest baring debt, and take it back into the public domain.

    I do not believe aiming government policy at increasing minimum wages will work, because this does not treat the cause of the problem, it only trys to compensate a symptom of a far bigger problem. By treating the symptom, we do not address the cause, and so risk other symptoms breaking out elsewhere in the system, like malinvestment and poor management of the environment as money dominates decision making.

  11. Wanda: In addition to my comment above…

    It is probably argued by Conservative MPs that it is ridiculous to assume that the Banks are in anyway responsible for the expansion of credit due to the fact that they can’t just create money out of nothing without a borrower signing on the loan agreement. Of course Banks need borrowers and of course a borrower – who requires money to buy a Home, can refuse to take out the mortgage. In which case the potential borrower can decline from buying a House – where another purchaser will take his place and is prepared or unaware of the consequences of such a debt, and our initial borrower can then sleep on the streets with his wife and kids. We have a choice of taking on debt or sleeping on the streets. So arguments from Conservatives who say we have a choice are facile. Many Tory MPs do not even understand how money is created, but they confidently and with great style explain how we have a choice in these matters. They comment on these subjects with knowledge that many donations (over 50% of Tory campaign funds) come from wealthy donors linked to the Financial Industry and the City of London, so they have a bias in Favour of Bankers without even understanding the implications of what they are doing by supporting the Private Banking and Investment Institutions.

    Unfortunately, it rests with all of us to understand more than our MPs, which, due to their ignorance and simplistic view of a Piggy Bank like Banking system, will not be difficult achieve.

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